J.P. Morgan maintains OW on Iluvatar CoreX - H (9903.HK), raises target price to HK$920

Overview

This report is J.P. Morgan's company research on Iluvatar CoreX - H (9903.HK). The analysts maintain an OW rating and raise the Jun-27 target price to HK$920, based primarily on the company's CSP client design wins amid expanding AI demand in China, limited supply chain disruptions, and the higher ASP and gross margin potential from mass production of next-generation high-end GPUs.

Core views

The report believes Iluvatar CoreX is better positioned among China's second-tier domestic GPU vendors: on one hand, it has secured relatively stable wafer foundry supply and optimized inference performance, benefiting from the trend of Prefill/Decode decoupling; on the other hand, V100X has passed CITSEC certification for secure local inference GPUs, helping it take on government projects. J.P. Morgan expects the company's 2026E revenue to be about Rmb3bn, mainly contributed by existing products; starting from 2H26, mass production of the next-generation Tiangai 300 series GPUs will drive significant upward revisions to 2027/28E revenue and earnings.

Analysis framework

The report uses a combination of fundamental forecasting and relative valuation: it first assesses the impact of CSP design wins, supply capability, product iteration, ASP/GPM improvement, and training-market expansion on revenue and earnings, and then applies a one-year forward P/S valuation framework to derive the target price, with a discount to the domestic peer average valuation reflecting the company's smaller near-term revenue base and market risk premium.

Methodology notes

• Valuation methodsOne-Year Forward P/S Multiple

  20x one-year forward P/S

  The Jun-27 target price of HK$920 is based on 20x one-year forward P/S, representing a 30% discount to the average valuation of domestic peers, to reflect the company's smaller near-term revenue base and market risk premium.

• Earnings ForecastUpward Revisions to Sales and Earnings Forecasts

  2026-28E growth model

  The report raises 2027/28E sales forecasts by 52%/40% and earnings forecasts by 29%/33%, and projects 2026-28E sales/earnings CAGR of 125%/241%, respectively.

• Industry Chain AnalysisAssessment of CSP Design Wins and Supply Disruptions

  Design wins, supply stability, and product performance

  The report identifies secure capacity support, inference performance optimization, breakthroughs with leading CSPs such as ByteDance, CITSEC certification, and volume ramp-up of the Tiangai 300 series as the core growth drivers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Iluvatar CoreX - H (9903.HK)

  Covered Company

  Strengths

  Benefits from China's AI demand growth, CSP design wins, limited supply disruptions, V100X's CITSEC certification, and the volume ramp-up potential of the next-generation Tiangai 300 series GPUs.

  Weaknesses

  Its near-term revenue base is relatively small, it remains in a phase of high R&D spending and product iteration, and it depends heavily on the production ramp of new GPUs and the conversion of client orders.

  Comparison

  The report believes the company is better positioned among China's second-tier domestic GPU vendors; its target valuation is set at a 30% discount to the domestic peer average.

  Risks

  Tighter U.S. restrictions on foundry services, lower-than-expected domestic foundry yields, weaker-than-expected CSP capex, recovery in overseas chip supply, or rising R&D expense ratio.

Key data

• Current PriceHK$684.00Closing price on 2026-06-26.
• Target PriceHK$920.00Jun-27 target price; previously HK$620.00.
• Implied UpsideApproximately 34.5%Calculated based on the HK$920 target price and HK$684 current price.
• 2026E RevenueApproximately Rmb3bnMainly driven by sales of existing products.
• 2027/28E Sales Forecast Revisions+52% / +40%Driven by ramp-up of next-generation GPUs, CSP design wins, and supply improvements.
• 2027/28E Earnings Forecast Revisions+29% / +33%Supported by expectations for higher ASP and higher GPM.
• 2026-28E Sales/Earnings CAGR125% / 241%Projected by J.P. Morgan's current model.
• New GPU ASPCould exceed three times that of existing productsRefers to the next-generation Tiangai 300 series, which has higher ASP and higher gross margins than existing products.
• Valuation Multiple20x P/SOne-year forward P/S, with a 30% discount to the domestic peer average.

Impact & implications

If CSP client breakthroughs and mass production of next-generation GPUs proceed smoothly, the company's revenue mix may gradually expand from existing inference GPUs into the LLM training market, bringing a larger addressable market and a faster earnings inflection point. For investors, the report attributes recent share-price volatility mainly to liquidity and views it as a buy-on-dips opportunity, but this judgment is highly dependent on stable supply, client capex, and delivery on new product yield.

Risks

• Tighter U.S. restrictions on wafer foundry services, or lower domestic foundry yields than expected, could cause supply disruptions.
• If end demand weakens or overseas chip availability improves, CSP capital expenditure may come in below expectations.
• Rising R&D expense ratio due to new chip design and tape-out could affect profitability.

What to watch

• Mass-production progress of the next-generation Tiangai 300 series GPUs in 2H26.
• Order momentum and conversion of design wins from leading CSP clients such as ByteDance.
• Progress in securing government projects after V100X obtained CITSEC certification.
• Changes in domestic and overseas foundry capacity, yields, and U.S. restrictions.
• CSP capital expenditure and the strength of AI inference and LLM training demand.
• Whether the company achieves profitability in 2027 as expected.